STATE BANK OF INDIA vs SAKSARIA SUGAR MILLS LTD. AND ORS.

The Supreme Court interpreted Section 7(1)(b) of The Sugar Undertakings (Taking over of Management) Act, 1978, determining that while contracts and agreements related to a sugar undertaking may be suspended upon government notification, the remedies against guarantors remain enforceable. The Court held that the liability of the surety under Section 128 of the Indian Contract Act, 1872, is co-extensive with that of the principal debtor, thus allowing the appellant's suit for recovery against the guarantors to proceed despite the suspension of the principal debtor's obligations.